Judgement ORDER : - As common questions of law arise for determination in these case, I propose to dispose of them by a common order. 2. A public limited company called 'Hegde and Golay Limited,' (hereinafter referred to as the holding Company) incorporated under the Companies Act in Bangalore City is engaged in the business of manufacture of wristwatches with swiss collaboration on the outskirts of Bangalore City. One Sri B.T. Shaker Hegde, is its Chairman and Managing Director and his wife Smt. Shaila S. Hegde is one of its Directors. Both these persons are the moving spirits of the holding company and its subsidiaries. In the same complex, there are 18 other private limited companies which are subsidiary companies or ancillary units called, (i) Shree Shyla Repetative Parts Limited; (ii) Shree Shyla Precision Components (P) Limited; (iii) Shree Shyla Watches and Rotors (P) Limited; (iv) Shree Shyla Stamping (P) Limited; (v) Shree Shyla Tooling and Accessories (P) Limited; (vi) Shree Shyla Metal Treaters Limited; (vii) Shree Shyla Precision Lever and Assortments; (viii) Shree Shyla Graphic (P) Limited; (ix) Shree Shyla Jig and Fixtures (P) Limited; (x) Shree Shyla Horologicals (P) Limited; (xi) Shree Shyla Crowns and Screws (P) Limited; (xii) Shree Shyla Precision Staff and Stems (P) Limited; (xiii) Shree Shyla Screen Printers (P) Ltd; (xiv) Shree Shyla Gears and Prinions (P) Limited; (xv) Shree Shyla Automats (P) Limited; (xvi) Shree Shyla Ceramics (P) Limited; (xvii) Shree Shyla Escapements (P) Limited; and (xviii) Shree Shyla Barrels and Arbors (P) Limited incorporated under the Companies Act engaged in the manufacture of various components of watches that are assembled and sold by the holding company. 3. Some time in 1973, the 18 subsidiaries individually and separately applied to the Karnataka State Financial Corporation (hereinafter referred, to as the Corporation) established and functioning under the provisions of the State Financial Corporations Act, 1951 (Central Act 63 of 1951) (hereinafter referred to as the Act) for grant of Indian and Foreign currency loans of varying amount which were sanctioned by it. 4. The 18 subsidiaries have drawn the respective amounts sanctioned to them by the Corporation and have executed various documents to secure their repayment on the terms and conditions set out thereto. Broadly those documents have secured the mortgage of immovable properties and hypothecation of plant and machinery and other movables owned by the respective subsidiaries. 4. The 18 subsidiaries have drawn the respective amounts sanctioned to them by the Corporation and have executed various documents to secure their repayment on the terms and conditions set out thereto. Broadly those documents have secured the mortgage of immovable properties and hypothecation of plant and machinery and other movables owned by the respective subsidiaries. Secondly, those documents provide for repayment of the borrowed amounts with interest thereon in fifteen half yearly instalments. 5. The Directors of the subsidiaries have also stood as guarantors for repayment of the loans borrowed by the subsidiaries. On further applications made thereto by the units the Corporation has granted them additional loans in the year 1975-76 which also have been drawn and utilised by them. 6. Unfortunately, the subsidiaries did not exhibit the same anxiety for repayment of the amounts drawn, interest or the over due interest due by them except making one or two payments at the initial stage towards interest only evidently to induce the Corporation to sanction the additional loans. 7. After protracted correspondence and unsuccessful demands, and being unable to recover a huge sum of Rs. 3,72,88,521/51 that had then become due to it by the 18 subsidiaries, the Corporation on different dates in September, October and November 1979 presented 18 applications against the 18 subsidiaries under section 31 of the Act before the District Judge, Bangalore in Misc. Petitions Nos. 37, 38, 40 to 43, 45, 46, 49, 51 to 53, 55 to 60 of 1979 for recovery of the amounts due by the respective subsidiaries by the sale of the mortgaged and hypothecated properties, an injunction to restrain the units from disposing of, transferring or removing the plant and machinery or equipment detailed in the schedules to the petitions and for an order of attachment of the properties detailed in the schedules to the petitions. But, in these we are concerned with applications numbered as Misc. Nos. 42, 46. 37, 38, 40, 41, 43, 45 of 1979 filed against 8 subsidiaries called, as (i) Shreeshyla Crown and Screws (P) Limited; ((i) Shreeshyla Ceramics (P) Limited; (iii) Shreeshyla Jig and Fixtures Limited; (iv) Shreeshyla Barrels and Arbors (P) Limited: (v) Shreeshyla Screen Printers Limited: (vi) Shreeshyla Automats Limited; (vii) Shreeshyla Stamping Limited; and (vii) Shreeshyla Precision Staff and Stems Limited who are the petitioners before me. 8. 8. Before the Learned District Judge can make ex parte ad interim orders of temporary injunction and attachments, the aforesaid 8 subsidiaries had either entered caveat or suo motu entered appearance and opposed the prayer of the Corporation for injunction and attachment on diverse grounds. 9. On an examination of the contentions urged before him, by the Corporation and 8 subsidiaries, the learned District Judge, by his common order dated 7-11-1979 (Annexure-R in Writ petition No. 18550 of 1979) overruled the objections of the petitioners and made an interlocutory order in these terms : "In the result, I overrule the objections of the respondents for passing the ad interim order of attachment and injunction and I direct by this order that the properties described in each of the petitions shall be attached for the security of the amounts claimed in the respective petitions and further the respondents shall be restrained by an order of injunction from transferring or removing the machineries detailed in schedule-2 to the various petitions". 10. Against the aforesaid interlocutory order of the learned District Judge, the 8 petitioners filed civil revision petitions under Section 115 of the Code of Civil Procedure before this Court with applications for stay in C.R.Ps. Nos. 3170, 3213 to 3219 of 1979. 11. In those revision petitions, the Corporation which was the sole respondent, suo motu entered, appearance and opposed the admission of the cases and the applications for stay. After a number of adjournments those cases were posted to 23-11-1979 for admission with applications for stay. On that day, when those cases were posted for admission before the Hon'ble the then Chief Justice, the petitioners filed a memo in these terms : "The petitioners in the above Civil Revision Petitions pray that they may be permitted to withdraw the above Civil Revision Petitions filed by them". On that memo, the learned Chief Justice made an order in these terms : "Sri A.G. Murali Krishna, learned Counsel for the petitioner seeks leave to withdraw these petitions. He is permitted to do so. These petitions are dismissed as withdrawn". 12. On that memo, the learned Chief Justice made an order in these terms : "Sri A.G. Murali Krishna, learned Counsel for the petitioner seeks leave to withdraw these petitions. He is permitted to do so. These petitions are dismissed as withdrawn". 12. But, on the very day the above revision petitions were withdrawn and dismissed or even before the ink used in writing those orders was dry, one of the subsidiary called Shreeshyla Crowns and Screws Private Limited, which was the petitioner in C.R.P. No. 3214 of 1979 and one of its Director - S.L. Shanker presented Writ Petition No. 18550 of 1979 under Article 226 of the Constitution, challenging the vires of Sections 29, 30, 31 and 32 of the Act and the interlocutory order of the learned District Judge made against it. On 26-11-1979 Kudoor, J. issued rule nisi in the said writ petition and stayed further proceedings in Misc. Petition No. 42 of 1979 on the file of the District Judge with which that petitioners were concerned. On the very next day, 7 others subsidiaries that had filed revision petitions and S.L. Shankar filed writ petitions in writ petitions Nos. 18642 to 18648 of 1979 before this Court challenging the very same provisions and the order made by the learned District Judge against them. On the very same day, Kudoor, J., issued rule nisi in these petitions and stayed the proceedings before the learned District Judge. 13. According to the petitioners Sections 29 to 32 of the Act has conferred arbitrary and unguided power on the Corporation to recall the loans sanctioned to them at its whim and fancy and they are, therefore, violative of Article 14 of the Constitution. Secondly, they have maintained that the special power conferred, on the District Judge to order sale, grant of injunction and attachment of properties by passing the ordinary legal remedies available to other secured and unsecured creditors is only antithesis of the rule of law, arbitrary and unguided and are violative of Article 14 of the Constitution. On this premises, the petitioners contend that the order made by the learned District Judge is void and the proceedings initiated and pending against them require to be annulled. 14. In all these cases, the Corporation arrayed as respondent No. 2 is the principal contesting respondent. On this premises, the petitioners contend that the order made by the learned District Judge is void and the proceedings initiated and pending against them require to be annulled. 14. In all these cases, the Corporation arrayed as respondent No. 2 is the principal contesting respondent. In its detailed return, respondent No. 2 has set out the details of its claims against the respective petitioners and the contumacious default committed by them in the repayment of loans drawn by them. 15. On the vires of sections 29 to 32 of the Act, respondent No. 2 has denied the allegations and contentions of the petitioners and has urged that they are not violative of article 14 of the Constitution. Not unnaturally, respondent No. 2 has supported the orders made by the learned District Judge. 16. The Union of India, respondent No. 1, the State of Karnataka, respondent No. 3 who have entered appearance, without filing separate returns, supported respondent No. 2 on the validity of the impugned provisions. 17. But, the District Judge, Bangalore arrayed as respondent No. 4 who has been duly served, has very rightly remained absent and is unrepresented. 18. In their petitions, the petitioners have challenged Section 29 of the Act also. But, at the hearing of these cases, Shri Ashok Kumar Sen, learned Counsel for the petitioners stated that their challenge to the said provision be rejected as not pressed. In the written notes of arguments filed before Court, the petitioners have not assailed the validity of section 29 of the Act. Hence, the challenge of the petitioners to section 29 of the Act is rejected as not pressed. 19. Before examining the validity of the other provisions of the Act, it is necessary to examine a preliminary objection raised by Shri S.G. Sundaraswamy, learned Counsel for respondent No. 2 to the maintainability of these writ petitions. 20. Sri Sundaraswamy urged that these petitions are not maintainable on the ground that the petitioners who had challenged the orders of the District Judge before this Court in Civil Revision Petitions, withdrew them unconditionally and they were dismissed without reserving liberty to challenge Sections 29 to 32 of the Act and the orders made thereto. 21. 20. Sri Sundaraswamy urged that these petitions are not maintainable on the ground that the petitioners who had challenged the orders of the District Judge before this Court in Civil Revision Petitions, withdrew them unconditionally and they were dismissed without reserving liberty to challenge Sections 29 to 32 of the Act and the orders made thereto. 21. Sri Sen urged that the unconditional withdrawal and of the Civil Revision Petitions, did not bar the petitioners from challenging the vires of the provisions of the Act and the orders made thereto and, therefore, these petitions were maintainable. In support of his contention Sri Sen strongly relied on the principles enunciated by the Supreme Court in Daryao v. State of U. P., ( AIR 1961 SC 1457 at p. 1466.) 22. An authority like the District Judge, created under the Act, cannot declare the provisions invalid even if he was satisfied that they were invalid. The exclusive power in decide the validity of the Act or any of its provisions can only be exercised by a High Court or by the Supreme Court and not by any other subordinate Court much less by a Court or an authority created under the very Act itself. But, still it was open to the petitioners to assail the validity of Sections 29 to 32 of the Act before the District Judge. If the petitioners had challenged the Act or any of its provisions, then it was open to the District Judge, if he was satisfied that the factors enumerated in the proviso to Section 113 of the Civil P.C. exist, to make a reference to this Court to decide the validity of the Act or any of its provisions with his opinion thereon. But, this the petitioners have not availed. 23. In the original petitions filed by the Corporation, which are still pending or in the Revisions Petitions directed against an interlocutory order, there has been no adjudication on the validity of Sections 30 to 32 of the Act. 24. When the Corporation instituted the proceedings under Section 31 of the Act, it was also open to the petitioners to move this Court under Article 226 of the Constitution for a declaration that the provisions were invalid and the proceedings pending before the District Judge should not be proceeded with. 25. 24. When the Corporation instituted the proceedings under Section 31 of the Act, it was also open to the petitioners to move this Court under Article 226 of the Constitution for a declaration that the provisions were invalid and the proceedings pending before the District Judge should not be proceeded with. 25. But, the fact that the petitioners appeared before the District Judge, did not raise that objection before him or in the interlocutory orders that were passed by him does not and cannot take away the right of the petitioners to challenge the validity of the provisions and the consequent orders made thereto by the District Judge. 26. In Daryao's case, ( AIR 1961 SC 1457 ), a Constitution Bench of the Supreme Court examining the applicability of the principle of res judicata to proceedings under Articles 226 and 32 of the Constitution has expressed on the effect of withdrawal of a writ petition and its dismissal by the Court in these terms (at p. 1466); "If the petition is dismissed as withdrawn it cannot be a bar to a subsequent petition under Article 32 of the Constitution because, in such a case there has been no such decision on merit by the Court." In my view, the above enunciation governs the withdrawal of Civil Revision Petitions and their dismissal by this Court. 27. Without any doubt, if the provisions are declared as invalid, then the orders made thereunder by the learned District Judge have necessarily to be declared as invalid. 28. On the above discussion, it follows that there is no merit in the preliminary objection raised by Sri Sundaraswamy. I, therefore, reject the same. 29. Sri Sen has contended that Sections 30 to 32 of the Act have conferred arbitrary, uncontrolled, unguided and uncanalised powers on the Corporation to recall the loans at its whim and fancy and the District Court which is compelled to accept the same as an automat were violative of Article 14 of the Constitution. 30. Sri Sundaraswamy refuting the contention of Sri Sen has urged that the impugned provisions were not violative of Article 14 of the Constitution. 31. Sriyuths K. Shivashankar Bhat, learned Central Government Senior Standing Counsel appearing for respondent No. 1 and U. Abdul Khader, learned High Court Government Pleader appearing for respondent No. 3 adopted the arguments of Sri Sundaraswamy and supplemented them. 32. 31. Sriyuths K. Shivashankar Bhat, learned Central Government Senior Standing Counsel appearing for respondent No. 1 and U. Abdul Khader, learned High Court Government Pleader appearing for respondent No. 3 adopted the arguments of Sri Sundaraswamy and supplemented them. 32. Before examining the contentions of Sri Sen, it is useful to briefly analyse the Act and the impugned provisions in detail. 33. The Act has been enacted by Parliament in exercise of the powers conferred on it by Article 246 and Entry 32 of List I Schedule 7 of the Constitution. The Act has come into force from 1-8-1952. 34. A preamble to an Act generally opens the key to the Act. But, the preamble to the Act does not do so. The preamble simply states that the Act has been enacted to provide for the establishment of the State Financial Corporation in the Country. In this view, it would be proper to refer to the statement of objects and reasons that accompanied the bill. 35. The Statement of Objects and Reasons accompanying the bill that later became the Act with the modifications suggested by the select committee reads thus : "In order to provide medium and longterm credit to industrial undertakings, which falls outside the normal activities of commercial banks, a Central Industrial Finance Corporation was set up under the Industrial Finance Corporation Act, 1948 (XV of 1948). The State Governments wish that similar Corporations should also be set up in the States to supplement the work of the Industrial Finance Corporation. The intention is that the State Corporation will confine their activities to financing medium and small scale industries and will, as far as possible, consider only such cases as are outside the scope of the Industrial Finance Corporation. The State Governments also consider that the State Corporations should be established under a special Statute in order to make it possible to incorporate in the Constitution necessary provisions in regard to majority control by Government, guarantee by the State Government in regard to the repayment of principal, and payment of a minimum rate of dividend on the shares, restriction on distribution of profits and special powers for the enforcement of its claims and recovery of dues. Since the incorporation, regulation and winding up of such Corporations fall within the purview of Parliament - vide Entry No. 43 of the Union List - the State Government have requested the Government of India to enact the necessary enabling legislation, which is sought to be effected by this bill. ''2. The main features of the Bill are as follows : - (i) The Bill provides that the State Government may, by notification in the Official Gazette, establish a Financial Corporation for the State. (ii) The share capital shall be fixed by the State Government but shall not exceed Rs. 2 crores. The issue of the shares to the public will be limited to 25 per cent of the share capital and the rest will be held by the State Government, the Reserve Bank, scheduled banks, insurance companies, investment trusts, cooperative banks and other financial institutions. (iii) Shares of the Corporation will be guaranteed by the State Government as to the repayment of principal and the payment of a minimum dividend to be prescribed in Constitution with the Central Government. (iv) The Corporation will be authorised to issue bonds and debentures for amounts which together with the contingent liabilities of the Corporation shall not exceed five times the amount of the paid up share capital and the reserve fund of the Corporation. These bonds and debentures will be guaranteed as to the payment of the principal and the payment of interest at such rate as may be fixed by the State Government. (v) The Corporation may accept deposits from the public repayable after not less than five years, subject to the maximum not exceeding the paid-up capital. (vi) The Corporation will be managed by a Board consisting of a majority of Directors nominated by the State Government, the Reserve Bank and the Industrial Finance Corporation of India. (vii) The Corporation will be authorised to make long-term loans to industrial concerns and to guarantee loans raised by industrial concerns which are repayable within a period not exceeding 25 years. The Corporation will be further authorised to underwrite the issue of stocks shares, bonds or debentures by industrial concerns, subject to the provision that the Corporation will be required to dispose of any shares, etc., acquired by it in fulfilment of its underwriting liability within a period of 7 years. The Corporation will be further authorised to underwrite the issue of stocks shares, bonds or debentures by industrial concerns, subject to the provision that the Corporation will be required to dispose of any shares, etc., acquired by it in fulfilment of its underwriting liability within a period of 7 years. (viii) Until a reserve fund is created equal to the paid-up share capital of the Corporation and until the State Government has been repaid all amounts paid by them, if any, in fulfilment of the guarantee liability, the rate of dividend shall not exceed the rate guaranteed by the State Government. Under no circumstances shall the dividend exceed 5 per cent per annum and surplus profits will be payable to the State Government. (ix) The Corporation will have special privileges in the matter of enforcement of its claims against borrowers". (Gaz.Ind., 1950, Pt, II-Sec. 2, P.561). With the passage of time, the Act has undergone some changes. 36. But, from the Statement of Objects and Reasons and the preamble to the Act, two things clearly emerge viz., (i) a Corporation is primarily a State owned Corporation established for accelerating the growth of small and medium scale industries in the State in particular and the Country as a whole; (ii) a special procedure is provided in the Act for the recovery of the amounts lent by the Corporation to the industrial concerns. 37. Section 1 of Chapter-1 - Preliminary - deals with the title, extent and commencement of the Act, Section 2 defines certain terms. Section 2 (aa) defines the Development Bank as an Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964. Section 2 © defines an industrial concern as a concern engaged or to be engaged in the industries referred to in clauses (i) to (x) of that section. 38. Chapter-II of the Act - Incorporation of State Financial Corporations, their capital and management -elaborately deal with the incorporation, share capital the management of the Corporation by a Board of Directors, their qualifications and disqualifications, the executive Committee and other allied matters. 39. Section 24 of the Act found in Chapter-III - powers and duties of the Board - directs the Board to discharge its functions under the Act on business principles with due regard to the interests of the industry, commerce and the general public. 40. 39. Section 24 of the Act found in Chapter-III - powers and duties of the Board - directs the Board to discharge its functions under the Act on business principles with due regard to the interests of the industry, commerce and the general public. 40. Section 25 (1) of the Act enumerates the kinds of business that can be carried on by a Corporation. Sub-sections (2) to (5) deal with the limitations and restrictions subject to which the Financial Corporation can carry on its business. 41. Section 26 sets out the limit of accommodation that can be extended by a Corporation. Section 27 confers power on a Corporation to impose such conditions as are necessary to safeguard its interests in extending accommodation to an industrial concern. 42. Section 28 enumerates the nature of business that cannot be carried on by a Corporation. 43. Section 29, the challenge of which is not pressed and therefore does not call for scrutiny, confers a right on the Corporation to take over the management or possession or both of an industrial concern in the circumstances specified therein and the effect of such taking over also. 44. Section 30 of the Act, which is one of the three sections that is pressed and therefore calls for a detailed, scrutiny, empowers a Corporation to call for repayment of the loan or advance in full notwithstanding any agreement to the contrary. 45. But, that power to call for repayment of the entire amount can be exercised only in six circumstances detailed in clauses (a) to (f) of that section. 45. But, that power to call for repayment of the entire amount can be exercised only in six circumstances detailed in clauses (a) to (f) of that section. The six circumstances are (1) where the Board is satisfied that false and misleading information had been furnished by the industrial concern in its application for loan; (2) that the industrial concern had failed to comply with the terms of its contract with the Corporation in the matter of loan or advance; (3) that if there was a reasonable apprehension that the industrial concern was unable to pay debts or that proceedings for liquidation may be commenced in respect thereof; (4) that if the property pledged, mortgaged, hypothecated or assigned to the Corporation as security for the loan or advance was not insured and kept insured, by the industrial concern to the satisfaction of the Corporation or depreciates in value to such an extent that in the opinion of the Board, further security to the satisfaction of the Board should be given and such security was not given; (5) that without the permission of the Board the industrial concern had removed any of its machinery, plant or other equipment, whether forming part of the security or otherwise, without replacing the same; (6) that for any reason it was necessary to protect the interests of the Corporation. The power to recall can be exercised only if all or any one of the six circumstances exist and not otherwise. 46. Section 31 of the Act enables a Corporation to make an application before the District Judge of the area for all or any of the three reliefs detailed therein, if all or any of the circumstances referred, to in sub-section (1) of that section exist. 47. Section 32 of the Act sets out in detail the procedure to be followed by the District Judge in an application presented before him by a Corporation under Section 31 of the Act, the orders to be made by him, the remedy of an appeal to an aggrieved person before the High Court. 48. Section 32 (1) of the Act mandatorily directs the District Judge to make an ex parte ad interim order of attachment on an application made before him for reliefs under clauses (a) to © thereof. 49. 48. Section 32 (1) of the Act mandatorily directs the District Judge to make an ex parte ad interim order of attachment on an application made before him for reliefs under clauses (a) to © thereof. 49. Section 32 (2) mandatorily directs a District Judge to grant an ex parte ad interim temporary injunction on an application made before him for relief under Section 31 (1) (b) of the Act restraining the industrial concern from transferring or removing its machinery, plant or equipment. 50. Sub-section (3) of Section 32 empowers the District Judge to examine an officer of the Corporation on an application made before him before making an ex parte ad interim order of attachment or temporary injunction. 51. Section 32 (4) directs the District (Court) to issue a show cause notice to the industrial concern accompanied by a copy of the order made by him, the application and the evidence if any recorded by him calling upon the latter to show cause as to why the ex parte ad interim order of attachment or injunction should not be made absolute or confirmed. 52. Section 32 (6) requires the District Judge to investigate the claims made before him in accordance with the provisions contained in the Code of Civil Procedure in so far as they are applicable for such investigation. 53. Section 32 (7) provides for the nature of the orders to be made by the District Judge on completing his investigation. 54. Section 32 (8) and 32 (8-A) provides for effecting the attachment and sale of the property. 55. Section 32 (9) provides for the remedy of an appeal against any order made under sub-section (5) or sub-section (7) of Section 32 of the Act. 56. Section 32 (10), (11) and (12) of the Act further carry out the purpose of Section 32. 57. Sections 32A, 32B, 32D, 32E and 32F inserted by the amendment (Act 56 of 1956) empower the Corporation to appoint Directors and other incidental matters in case it takes over the management of an industrial concern. 58. Sections 33 to 38 of Chapter IV deal with investment of funds, accounts and audit of the Corporation. 59. Sections 39 to 49 of Chapter V, Miscellaneous deal with various other incidental matters that are not specifically dealt with in the earlier chapters. 60. 58. Sections 33 to 38 of Chapter IV deal with investment of funds, accounts and audit of the Corporation. 59. Sections 39 to 49 of Chapter V, Miscellaneous deal with various other incidental matters that are not specifically dealt with in the earlier chapters. 60. Section 46-B found in Chapter V provides that the provisions of the Act shall prevail notwithstanding any inconsistency in any other law or agreement to the contrary. This section also saves the right of a Corporation to seek other remedies available under the ordinary laws of the Country. 61. With this brief analysis of the Act and the impugned provisions, it is now useful to examine the contention of Sri Sen. 62. The moneys invested in the Corporation are wholly or essentially public moneys. The moneys lent or advanced by a Corporation to an industrial concern are wholly or essentially public moneys. 63. The impugned provisions are challenged as violative of Article 14 of the Constitution and on no other ground. In any of the cases brought to my notice, the Supreme Court or this Court have not examined their validity directly and pronounced on the same. 64. But, the true scope and ambit of Article 14 of the Constitution has been explained by the Supreme Court in numerous cases and a reference to all of them or extracting the principles stated in all of them is wholly unnecessary. A reference to four leading cases of the Supreme Court in Ram Krishna Dalmia v. Justice Tendolkar, ( AIR 1958 SC 538 ), Maganlal Chhagganlal (Pvt.) Ltd. V. Municipal Corporation of Greater Bombay, ( AIR 1974 SC 2009 ): Smt. Maneka Gandhi v. Union of India, ( AIR 1978 SC 597 ); and The Director of Industries. U.P. v. Deep Chand Agarwal, ( AIR 1980 SC 801 ) is sufficient for our purpose. In the light of the principles stated in those cases, I propose to examine the challenge of the petitioners. 65. The first and the foremost principle, that emerges from the rulings of the Supreme Court, in particular from Maganlal Chhagganlal's and Deep Chand Agarwal's cases is that a special and speedier procedure can be provided for speedy recovery of State dues and that the same will satisfy the twin test of permissible classification under Article 14 of the Constitution. 65. The first and the foremost principle, that emerges from the rulings of the Supreme Court, in particular from Maganlal Chhagganlal's and Deep Chand Agarwal's cases is that a special and speedier procedure can be provided for speedy recovery of State dues and that the same will satisfy the twin test of permissible classification under Article 14 of the Constitution. The second principle is whether the Act or provisions contain sufficient guidelines for the exercise of power by the authority. But, both these principles are not exhaustive and they are subject to whether the special procedure provided is harsh, unreasonable and unconscionable. 66. A Corporation constituted and functioning under the Act controlled by a Board of Directors with a Chairman and a Managing Director and at least four other directors nominated by the State Government, Reserve Bank of India, Development Bank, an undertaking of the Central Government and elected directors, if any is a responsible body. A Corporation is required to conduct its affairs on business principles with due regard to the interests of the industry and the public. Every one of the inbuilt safeguards in the Act, are provided by the legislature for a smooth and efficient functioning of a Corporation in the public interest. An irresponsibility or whimsical exercise of power by a financial corporation cannot be presumed by a Court. If anything, the presumption should be otherwise. A State owned financial Corporation is presumed to exercise its power and discharge its functions honestly and for purposes of the Act. The possibility of misuse of power in a given case, is not a ground for striking down an Act or provision in an Act. Any such misuse of power by a Corporation in a given case can be remedied by the District Judge or the High Court in an appeal and in any event by a High Court in a proceeding under Article 226 of the Constitution and in the ultimate by the Supreme Court. 67. The power to take over the management cannot be exercised by a Corporation for the mere heck of it. A Corporation can exercise the right or power under Section 29 of the Act only if all or any of the circumstances mentioned in that section exist and not otherwise. 67. The power to take over the management cannot be exercised by a Corporation for the mere heck of it. A Corporation can exercise the right or power under Section 29 of the Act only if all or any of the circumstances mentioned in that section exist and not otherwise. But, as the petitioners have withdrawn their challenge to section 29 of the Act, it is not necessary to further examine the validity of the said section. 68. When a Corporation/Board on an examination of the material and circumstances placed before it and the factors enumerated in Section 30 of the Act is satisfied that the loan or advances have to be recalled from an industrial concern, then it is required to issue a notice in writing to the industrial concern calling upon it to discharge the entire loan or advance. 69. Before issuing the notice itself, it must be presumed that the Board will collect all the data and decide the matter objectively. But, still in response to the notice in writing issued, it is undoubtedly open to an industrial concern to furnish its reply and satisfy the board that the material or information on the basis of which it has proceeded was not correct and there was no justification to recall the loan or advance. A reply furnished by an industrial concern will receive due consideration by the Corporation and if it is satisfied with the same, it may not even proceed with the recalling of the entire loan or advance and may permit the industrial concern to make payments in terms of the agreements entered into between it and the industrial concern. 70. A Corporation can recall the loan or advance only in the six specified circumstances and not in all the circumstances. The six circumstances or guidelines are intended to safeguard a Corporation and the public moneys lent to an industrial concern. But, one thing that is clear from an analysis of Section 30 of the Act is that a Corporation is not empowered to call the entire loan or advance at its whim and fancy. 71. Sri Sen, in my opinion, rightly did not urge that the six factors or guidelines enumerated in Section 30 of the Act to safeguard the interests of a Financial Corporation and the public moneys, suffer from any constitutional infirmity. 71. Sri Sen, in my opinion, rightly did not urge that the six factors or guidelines enumerated in Section 30 of the Act to safeguard the interests of a Financial Corporation and the public moneys, suffer from any constitutional infirmity. Even otherwise, the six circumstances set out in great detail do not suffer from any constitutional infirmity. 72. Section 30 of the Act passes the twofold test of a valid classification under Article 14 of the Constitution. Section 30 has not also conferred arbitrary, unguided, uncontrolled and uncanalised power on a Financial Corporation. Last but not the least the satisfaction of the Corporation is not made final but is subject to judicial scrutiny. Hence, the challenge of the petitioners to Section 30 of the Act as violative of Article 14 of the Constitution, has no merit. 73. When a Financial Corporation exercises the power conferred on it by Section 30 of the Act and issues a notice in writing it is open to an industrial concern to issue a reply and urge any grounds that are available to it or make payments or discharge the liabilities. If an industrial concern makes payment or discharges the liability, the Financial Corporation making an application for the defaults committed by the former will not arise. But, when an industrial concern makes a default, the Financial Corporation is required to make an application under Section 31 of the Act before the District Judge. 74. Section 31 of the Act sets out the particulars to be furnished in an application to be made by a Financial Corporation and the reliefs that can be sought in such an application. Section 31 of the Act specifies the forum, the nature and content of the application to be made by a Financial Corporation with reference to the matters enumerated in Sections 29 and 30 of the Act. If Sections 29 and 30 are valid, then it follows that Section 31 which only prescribes the forum and the nature of the application to be made would also be valid. Even otherwise, it is difficult to hold that Section 31 is violative of Article 14 of the Constitution on any of the principles enunciated by the Supreme Court in the leading cases noticed earlier or other cases. In this view, the challenge of the petitioners to Section 31 of the Act cannot be sustained. 75. Even otherwise, it is difficult to hold that Section 31 is violative of Article 14 of the Constitution on any of the principles enunciated by the Supreme Court in the leading cases noticed earlier or other cases. In this view, the challenge of the petitioners to Section 31 of the Act cannot be sustained. 75. Section 32 (1) and (2) no doubt mandatorily requires a District Judge to make an order of attachment and an injunction. But, after making an ex parte ad interim order, the District Judge is required to issue a show cause notice to an industrial concern, examine the cause if any shown thereto and thereafter pass his order which is appealable to the High Court under Section 32 (9) of the Act. If sufficient cause is shown, the District Judge or the High Court has power to vacate the same. In other words, an ex parte order of attachment or injunction is not made final and conclusive. 76. Almost every day. Civil Courts, appellate and revisional Courts exercising powers over civil matters make ex parte orders of attachment and injunctions. But, the one and the only difference that we find with those orders made under Orders 38 to 40 of the Code of Civil Procedure and Section 32 (1) and (2) of the Act is that the District Judge has no discretion in making an ex parte attachment and injunction. The reason for making such a provision is not far to seek. 77. Before the District Judge, the lending institution and the applicant is a State owned Corporation that has lent public moneys and the same reasonably and bona fide apprehends that the concerned industrial concern is likely to defeat its claims and, therefore, it approaches him for safeguarding its interests or public moneys. On such an application any oscillation or delay on the part of the District Judge to make an ex parte attachment or an injunction, may result in defeating the very claim made by the Corporation and ultimately there may be nothing left to realise the public moneys that are due to it. As I apprehend this is the reason for the Parliament compelling the District Judge to make an ex parte order. As I apprehend this is the reason for the Parliament compelling the District Judge to make an ex parte order. But, even here, Parliament has taken care to direct the District Judge to notify the industrial concern, consider the cause shown by it and make an order thereto, which is made appealable before the High Court. If sufficient cause is shown by an industrial concern, the power to vacate the ex parte attachment or injunction by the District Judge or the High Court is implicit in Section 32 and cannot be doubted. 78. Section 32 of the Act conferring power on the highest judicial authority of the District to investigate the claims made by a Corporation in conformity with the Code of Civil Procedure, a provision for an appeal in respect of orders made under sub-sections (5) and (7) of Section 32 of the Act to a High Court cannot be said to provide for a harsh, unreasonable and unconscionable procedure. I, therefore, find it difficult to hold that Section 32 is Violative of Article 14 of the Constitution. 79. But, Sri Sen, placing very strong reliance on the ruling of the Supreme Court in Gujarat State Financial Corporation v. Natson anufacturing Co. Pvt. Ltd., ( AIR 1978 SC 1765 ) with considerable vehemence urged that Sections 30 to 32 of the Act deny the requirements of natural justice, provide for a harsh, unreasonable and unconscionable procedure and the District Judge is made a mere automat to accept the case of a Financial Corporation and they are, therefore, violative of Article 14 of the Constitution. 80. On the earlier analysis of Sections 30, 31 and 32 of the Act it is difficult to hold that these provisions contravene any of the principles of natural justice and provide for a harsh, unreasonable and unconscionable procedure. But, let me examine whether the ratio in Gujarat State Financial Corporation's case supports Sri Sen. 81. In Gujarat State Financial Corporation's case ( AIR 1978 SC 1765 ), the precise or the only question that arose for consideration was whether an application made by a Financial Corporation under Section 31 of the Act before a District Judge was a plaint or a suit on which ad valorem Court-fee had to be paid or only an application on which a fixed, court-fee of Re. 1/- had to be paid under the Bombay Court-fees Act. 1/- had to be paid under the Bombay Court-fees Act. In deciding that question, the Court referred to the scheme and, object of the Act, and the scope and extent of Sections 31 and 32 of the Act and then held that an application under Section 31 of the Act was not a plaint or a suit on which ad valorem court-fee under Bombay Court-fees Act had to be paid. 81A. In Gujarat State Financial Corporation's case the Court was not called upon to examine the true scope and ambit of Sections 30 to 32 of the Act or their validity. Hence, it is difficult to hold that Gujarat State Financial Corporation's case really assists Sri Sen. 82. In my view, the observations of the Supreme Court at para 30 in Gujarat State Financial Corporation's case ( AIR 1978 SC 1765 ) on which both sides relied, does not support the plea of Sri Sen that no discretion or power is left in the District Judge to investigate the claim and make his orders and reduces him to a mere automata, except to the extent of making an ex parte attachment or injunction as the case may be. After making the ex parte attachment or injunction, the District Judge's power to vacate or modify the same, if cause is shown by the industrial concern is not controlled. Apart from this, the power to investigate the matters within the limited sphere that arise before him is neither controlled nor destroyed. For these reasons, I see no merit in this contention of Sri Sen and I reject the same. 83. In Deep Chand, Agarwal's case, ( AIR 1980 SC 801 ) on which strong reliance was placed by Sri Sundaraswamy to sustain the impugned provisions, the facts were these : Deep Chand Agarwal borrowed a sum of Rs. 15,000/- from Government of Uttar Pradesh for setting up a small scale industry of panel pins and wire nails and to secure the repayment of that loan executed a deed of mortgage in favour of Government agreeing to repay the same in 10 half yearly instalments. 84. 15,000/- from Government of Uttar Pradesh for setting up a small scale industry of panel pins and wire nails and to secure the repayment of that loan executed a deed of mortgage in favour of Government agreeing to repay the same in 10 half yearly instalments. 84. Deep Chand committed default in Payment of the loan borrowed, by him from Government and, therefore, the same was sought to be recovered as arrears of land revenue under the Public Moneys Recoveries Dues Act, 1965 (U.P. Act 25 of 1955), the validity of which was challenged by Deep Chand Agarwal before the High Court of Allahabad as Offending Article 14 of the Constitution. Following an earlier ruling of the Supreme Court in Northern India Caterers (Pvt) Ltd. v. State of Punjab ( AIR 1967 SC 1581 ) the High Court of Allahabad struck down Section 3 of the U. P. Act and quashed the recovery against Deep Chand Agarwal, the correctness of which was challenged, by the State of Uttar Pradesh in an appeal filed before the Supreme Court. In reversing the judgment of the Allahabad High Court, the Supreme Court speaking through Venkataramiah, J. observed thus (at p. 805) : "6. At the outset, it has to be stated that the decision of this Court in Northern India Caterers Pvt. Ltd. ( AIR 1967 SC 1581 ) (supra) is overruled by this Court in Maganlal Chhagganlal (P) Ltd. v. Municipal Corporation of Greater Bombay, (1975) 1 SCR 1 : ( AIR 1974 SC 2009 ). The question for determination in this case is whether Section 3 of the impugned Act violates Article 14 of the Constitution. In order to decide this question, it is necessary to determine the object of the Act and whether the classification made between the State on the one hand and others who have also advanced moneys under mortgage deeds bears any reasonable relation to the object of the statute. The Act is passed with the object of providing a speedier remedy to the State Government to realise the loans advanced by it or by the Uttar Pradesh Financial Corporation. The State Government while advancing loans does not act as an ordinary banker with a view to earning interest. The Act is passed with the object of providing a speedier remedy to the State Government to realise the loans advanced by it or by the Uttar Pradesh Financial Corporation. The State Government while advancing loans does not act as an ordinary banker with a view to earning interest. Ordinarily it advances loans in order to assist the people financially in establishing an industry in the State or for the development of agriculture, animal husbandry and for such other purposes which would advance the economic well-being of the people. The amounts so advanced are repayable in easy instalments with interest which would ordinarily be lower than the rate of interest payable on loans advanced by banking institutions which are run on commercial lines. The loans are advanced from out of the funds of the State in which all the people of the State are vitally interested. Moneys advanced by the State Government have got to be recovered expeditiously so that fresh advances may be made to others who have not yet received financial assistance from the State Government. If the State Government should resort to a remedy by way of a suit on the mortgage deeds or bonds executed in its favour, the realization of the amounts due to the Government is bound to be delayed resulting in non-availability of sufficient funds in the hands of the State Government for advancing fresh loans. It is with the object of avoiding the usual delay involved in the disposal of suits in civil courts and providing for an expeditious remedy, the Act has been enacted. In the instant case, the mortgage deed provided that the amount due thereunder could be realized as if it were an arrear of land revenue. It cannot, therefore, be said that there is no reasonable basis for the classification made by the statute and that the classification does not have a reasonable relation to the object of the statute. xx xx xx 8. Certain provisions similar to the Act impugned in this case enabling a State Government to recover the amounts due to it by resorting to a speedier remedy have been upheld by this court in two cases - (1) Manna Lal v. Collector of Jhalawar, (1961) 2 SCR 962 : ( AIR 1961 SC 828 ) and Lachhman Das v. State of Punjab, (1963) 2 SCE 353 : ( AIR 1963 SC 222 ). In the case of Manna Lal (supra) the facts were these: The Jhalawar State Bank was originally a Bank belonging to the princely State of Jhalawar. Its assets, including moneys due to it, became vested in the United State of Rajasthan under the covenant executed by the Ruler of Jhalawar along with other Rulers by which the United State of Rajasthan was formed. On the promulgation of the Constitution of India, the United State of Rajasthan became the State of Rajasthan in the Indian Union and all its assets including the Jhalawar State Bank and its dues vested in the State of Rajasthan. In that case the question which arose for consideration was whether moneys which had been advanced by the Jhalawar State Bank could be recovered by taking proceedings under the Rajasthan Public Demands Recovery Act. This Court held that the amounts could be recovered by the state of Rajasthan after the Bank had become vested in it as a public demand under the Rajasthan. Public Demands Recovery Act and that the said Act did not offend Article 14 of the Constitution even though it provided a special facility to the Government as a banker for the recovery of the bank's dues for the Government could legitimately be put in a separate class for this purpose. In the latter case i.e., the case of Lacchhman Das (supra), the right of Patiala state Bank to recover the amounts due to it under the provisions of the Patiala Recovery of State Dues Act was questioned. This Court held that the Bank established by a State had distinctive features which differentiated it from other Banks and formed a category in itself and the Act in setting up separate authorities for determination of disputes and in prescribing a special procedure to be followed by them for the recovery of the dues by summary process could not be considered to be discriminatory. 9. 9. We are, therefore, of the view that Section 3 of the Act which enables the State Government to recover the sums advanced under the circumstances mentioned therein as if they were arrears of land revenue cannot be held to be discriminatory and violative of Article 14 of the Constitution." In my view, the above principles apply on all fours to the special provisions made in the Act for recovery of loans due to a state Financial Corporation and the challenge to the same cannot be upheld. 85. In State Financial Corporation Ltd. v. M/s. Satpathy Brothers and Nanda Co. (P) Ltd. (AIR 1975 Orissa 132) a Full Bench of the Orissa High Court has upheld the validity of S.31 of the Act. I am in respectful agreement with the views expressed in Satpathy Brothers' case. 86. On the application of any of the well accepted principles, the challenge of the petitioners to Sections 30 to 32 of the Act as violative of Article 14 of the Constitution is ill conceived and has no merit. I, therefore, reject the challenge of the petitioners to Sections 30 to 32 of the Act and the orders made by the District Judge. 87. On the above conclusions these writ petitions are liable to be dismissed which necessarily mean that the District Judge has to dispose of the applications of the Corporation. But before doing so, it is necessary to notice and deal with two other contentions urged by Sri Sundaraswamy. 88. Sri Sundaraswamy took serious exception to the nature of the defence urged by the petitioners in para 3 of their objection statements before the District Judge, in which they have urged that the Corporation itself approached them and the other subsidiaries to apply for loans, that they had suffered losses and injury by the delays in releasing the amounts and various other acts of the Corporation for which reason they were not at all liable to pay the amounts thereto and that the Corporation itself was liable to pay damages to them. 89. Before the District Judge, the applications made by the Corporation are still pending and are required to be decided by him. But, before the District Judge examines the applications made and the defences urged by the petitioners, it would not be proper for me to examine the merits of the defences urged and express my opinion. 89. Before the District Judge, the applications made by the Corporation are still pending and are required to be decided by him. But, before the District Judge examines the applications made and the defences urged by the petitioners, it would not be proper for me to examine the merits of the defences urged and express my opinion. I, therefore, refrain to examine the same and express my opinion. 90. Sri Sundaraswamy has lastly contended that the petitioners who had not disclosed all the facts relating to the previous proceedings candidly were not entitled for the equitable relief under Art.226 of the Constitution. 91. Sri Sen urged that there was no bar for the petitioners for filing these writ petitions and they have not disentitled themselves for relief under Article 226 of the Constitution. 92. In para 34 of their petitions, the petitioners have adverted to the filing of revision petitions and their withdrawal. But, unfortunately, the petitioners have not stated that the Corporation had token notice in those cases, opposed their prayer for stay and all the developments that took place in the Court. If all those facts which were within the knowledge of the petitioners had been stated in the writ petitions, as candidly as they were required to be stated, what view this court would have taken in issuing rule nisi and in any event in granting ex parte orders of stay which have continued for more than four years is rather difficult to say. In any event, the petitioners have been successful delaying the proceedings for over 4 years. The fact that the petitions are maintainable does not really touch on the contention urged by Sri Sundaraswamy. All these and other facts clearly justify the submission of Sri Sundaraswamy. In this view, I hold that even if there is merit in the contention urged for the petitioners, in such an event also, these are fit cases in which this Court should decline to exercise its extraordinary jurisdiction in their favour. 93. In the normal circumstances the challenge being common and the cases being heard together it is proper to direct the petitioners to pay one set of Advocate's fee. But, having regard to the conduct of the petitioners, the object with which these petitions have been filed it is proper to direct the petitioners in each of the writ petitions to pay separate Advocate's fee of Rs. But, having regard to the conduct of the petitioners, the object with which these petitions have been filed it is proper to direct the petitioners in each of the writ petitions to pay separate Advocate's fee of Rs. 500/- to respondents 1 to 3 only out of which respondents 1 and 3 shall be entitled to a sum of Rs. 125/- each and that respondent No. 2 shall be entitled to Rs. 250/-. 94. Applications presented before the District Judge under the Act are required to be decided with utmost expedition. But, alas that has not been possible primarily due to the pendency of these writ petitions and the stay orders made thereto. In these circumstances, it is proper to direct the present City Civil Court, Bangalore which is now seized of the cases and connected cases to dispose of them with utmost expedition. 95. In the light of my above discussion, I make the following orders and directions: (a) I dismiss these writ petitions and discharge the rule issued in all these cases with separate costs of respondents 1 to 3 in each case. Advocate's fee Rs. 500/- in each case which shall be apportioned among respondents 1 to 3 only in the proportion indicated in para 93 supra. But, respondent No. 4 is not entitled for costs. (b) I further direct the IV Additional City Civil Judge, Bangalore who is now seized of the matters to dispose of the renumbered Miscellaneous Cases Nos. 322, 323, 325 to 340 of 1981 pending before him with all such expedition as is possible in the circumstances of the cases and in any event positively before 31-3-1983 and report compliance thereof to this Court. (c) I direct the IV Additional City Civil Judge, Bangalore to prepone the hearing of the aforesaid cases now posted to 17-1-1983 to 6-12-1982. (d) I direct petitioner No. 1 in each of these writ petitions and respondent No. 2 to appear before the IV Additional City Civil Judge, Bangalore on 6-12-1982 and take further orders from that Court for the further progress of the cases. 96-102. Let a copy of this order be communicated to IV Additional City Civil Judge. Bangalore an or before 30-11-1982 without fail.